LOGICAL MODELS OR EMPIRICALLY TESTED KNOWLEDGE AS TOOLS FOR CONDUCTING ECONOMIC POLICY by Karl Brandt Professor of Economic Policy, emeritus When our President, Professor Schmolders, invited me to participate in the formal discussion he suggested as the topic: "Logical Models or Empirically tested knowledge as Tools for Conducting Economic Policy." After pondering the vast range of problems involved I chose for what I am going to say the subtitle: "Moral Perquisites of a Liberal Economic Order." To begin staking out a position of dissent I want to mention particularly to the younger fellowmembers of our Mont Pelerin Society a few of the milestones of its history. When our honorary President F.A. von Hayek launched the society of then 37 members with a ten day conference from the first to the tenth of April, 1947, some of the basic purposes of our endeavor were stated as follows: "A group of economists, historians, philosophers, and other students of public affairs from Europe and the United States met to discuss the crisis of our times and has agreed upon the following statement of aims: The central values of civilization are in danger. Over large stretches of the earth's surface the essential conditions of human dignity and freedom have already disappeared. In other ways they are under constant menace from the development of current tendencies of policy. The position of the individual and voluntary groups are professionally undermined by extensions of arbitrary power. Even that most precious possession of Western Man, freedom of thought and expression is threatened by the spread of creeds which claiming the privilege of tolerance when in the position of a minority, seek only to establish a position of power in which they can suppress and obliterate all views but their own. The Mont Pelerin group holds that these developments have been fostered by the growth of a view of history which denies all absolute moral standards and by the growth of theories which question the desirability of a rule of law. It holds further that they have been fostered by a decline of belief in private property and the competitive market; for without the diffused power and initiative associated with these institutions, it is difficult to imagine a society in which freedom may be effectively preserved. Believing what is essentially an ideological movement must be met by intellectual argument and the reassertion of valid ideals, the group is of the opinion that further study is desirable-inter alia-in regard to the following matters: 1) The analysis and explanation of the nature of the present crisis so as to bring home to others its essential moral and economic origins. 2) The redefinition of the functions of the state so as to distinguish more clearly between the totalitarian and the liberal order. 3) Methods of reestablishing the rule of law and of assuring its development in such manner that individuals and groups are not in a position to encroach upon the freedom of others and private rights are not allowed to become a basis of predatory power.